Consolidated Alloys (NZ) Limited v Edging Systems (NZ) Limited
[2012] NZHC 2818
•25 October 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-003021 [2012] NZHC 2818
UNDER the Patents Act 1953 and the Fair Trading
Act 1986
IN THE MATTER OF patent infringement and breach of the Fair
Trading Act
BETWEEN CONSOLIDATED ALLOYS (NZ) LIMITED
Plaintiff
ANDEDGING SYSTEMS (NZ) LIMITED First Defendant
ANDROBERT MAX BROUGH Second Defendant
Hearing: 23 October 2012
Counsel: TJ Walker and JC Dickson for Plaintiff
KW McLeod for Defendants
Judgment: 25 October 2012
JUDGMENT OF ASHER J
This judgment was delivered by me on Thursday, 25 October 2012 at 5pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
Simpson Grierson, DX CX 10092, Auckland.
Email: [email protected] and [email protected]
AJ Park, DX CP 21527, Auckland. Email: [email protected]
CONSOLIDATED ALLOYS (NZ) LTD V EDGING SYSTEMS (NZ) LTD HC AK CIV-2012-404-003021 [25
October 2012]
Introduction
[1] In this commercial list proceeding the plaintiff, Consolidated Alloys (NZ) Ltd, seeks to issue interrogatories against the second defendant, Robert Max Brough.
[2] The claims in the proceeding are for patent infringement and misleading and deceptive conduct in terms of s 9 of the Fair Trading Act 1986. The essential allegation is that Edging Systems (NZ) Ltd has manufactured, marketed and supplied part of a roof flashing system (“EZ-Edge”) which breaches Consolidated Alloys’ patent, and misleads the public into thinking that it is the product of Consolidated Alloys, and of similar performance and characteristics.
[3] This application for interrogatories was filed on 15 October 2012. There is a fixture for the substantive hearing set down for 5 November 2012.
The issues
[4] The defendants claim that the interrogatories are vexatious and oppressive, particularly given the close proximity to the trial. It was submitted that because these are commercial list proceedings no interrogatories should be ordered. It was asserted that the second defendant, Mr Brough, was currently in Greece and cannot be contacted. It is asserted that many of the interrogatories contain mixed questions of fact and law, or are an attempt to obtain further and better discovery, or an attempt to obtain further and better particulars. It is said that many of the interrogatories are irrelevant.
[5] The plaintiff says that the delay in issuing this request for interrogatories is explicable in light of the fact that it was reasonably anticipated that Mr Brough would give evidence by way of a brief. It was only discovered that he would not be giving any evidence when the briefs of evidence were provided by the defendants on
24 September 2012 (they were due on 7 September 2012). It is submitted that the plaintiff has acted promptly since then, serving its interrogatories on 28 September
2012.
[6] An ancillary issue that arises is whether the Court can properly take into account the fact that Mr Brough filed a “will say” statement for a settlement conference in the proceeding in November of last year.
The issue of interrogatories
[7] Rule 8.40(1) of the High Court Rules provides:1
8.40 Objection to answer
(1) A party may object to answer an interrogatory on the following grounds only:
(a) that the interrogatory does not relate to a matter in question between the parties involved in the interrogatories:
(b) that the interrogatory is vexatious or oppressive: (c) that the information sought is privileged:
(d) that the sole object of the interrogatory is to ascertain the names of witnesses.
[8] Rules 8.34 and 8.35 set out how interrogatories are to be provided and served, and r 8.36 sets out various limitations. Rule 8.36 provides that in determining an application the Judge must make any orders required to prevent unnecessary or oppressive interrogatories or unnecessary answers to interrogatories. Interrogatories are not defined in the High Court Rules and their nature and the detail of restrictions on them have been settled by judicial decisions.
[9] It is clear from r 8.40(1)(b) that the Court is bound to consider whether the interrogatories are necessary and not oppressive. It is also clear that the nature and purpose of interrogatories is different from that of pleadings, requests for particulars and notices to admit facts. The purpose of pleadings is to define issues and thereby inform the parties in advance of the case they have to meet.2 The provision of particulars is designed to assist in this process. Interrogatories are designed, in
contrast, to elicit material that will help the interrogating parties’ case. It was stated
1 These paragraphs are taken from Commerce Commission v Air New Zealand Ltd (No 6) [2012] NZHC 2113 at [14]–[17].
2 Farrell v Secretary of State for Defence [1980] 1 All ER 166 (HL) at 173.
by Buckley LJ in G & W Young and Co Ltd v Scottish Union and National Insurance
Co3 that there is:
[A] very plain line of demarcation between interrogatories and particulars. The principle underlying particulars was that they were given in order to make the plaintiff’s case plain, while interrogatories on the other hand were to assist the opposite side and they have nothing to do with particulars.
[10] There are limits on the scope of interrogatory questions, even if relevant. Interrogatories must relate to material facts rather than evidence. The leading statement of the nature is that of Lord Esher in Marriott v Chamberlain:4
The law with regard to interrogatories is now very sweeping. It is not permissible to ask the names of persons merely as being the witnesses whom the other party is going to call, and their names not forming any substantial part of the material facts; and I think we may go so far as to say that it is not permissible to ask what is mere evidence of the facts in dispute, but forms no part of the facts themselves. But with these exceptions it seems to me that pretty nearly anything that is material may now be asked. The right to interrogate is not confined to the facts directly in issue, but extends to any facts the existence or non-existence of which is relevant to the existence or non-existence of the facts directly in issue.
Admission of the reference to the “will say” statement
[11] Mr McLeod for the defendants objected to me accepting as admissible evidence the fact that, in advance of the judicial settlement conference on 21 October
2011, the defendants served a “will say” statement from Mr Brough that the second defendant would give as evidence at the trial. It is argued by Mr McLeod that any reference to the filing of any “will say” statement at a judicial settlement conference is privileged. He refers in particular to s 57(1) of the Evidence Act 2006 which provides:
57 Privilege for settlement negotiations or mediation
(1) A person who is a party to, or a mediator in, a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of any communication between that person and any other person who is a party to the dispute if the communication—
(a) was intended to be confidential; and
3 G & W Young and Co Ltd v Scottish Union and National Insurance Co (1907) 24 TLR 73 (HC)
at 74.
4 Marriott v Chamberlain (1886) 17 QBD 154 (CA) at 163.
(b) was made in connection with an attempt to settle or mediate the dispute between the persons.
[12] The question is whether the privilege under s 57(1) that arises “in respect of any communication” relates to the fact that there was a communication between the parties on a certain date and the substance of the communication, or rather the substance of the communication alone.
[13] In New Zealand Institute of Chartered Accountants v Clarke Keane J
observed on this issue:5
This could mean that a ‘communication’ is what is conveyed by the
‘document’: its strict content, to which any formal aspects are peripheral. Or it could mean that the ‘communication’ and the ‘document’ are one and the
same thing. It is against that state of equipoise that it seems to me right to
look to the common law to the extent that is allowable.
[14] This being the situation, I respectfully agree that resort can be had to the common law, in particular in light of s 10(1)(c) which provides:
10 Interpretation of Act
(1) This Act—
...
(c) may be interpreted having regard to the common law, but only to the extent that the common law is consistent with—
(i) its provisions; and
(ii) the promotion of its purpose and its principles; and
(iii) the application of the rule in section 12.
[15] The purpose behind the rule protecting communications made between persons who are parties to a dispute in connection with an attempt to settle the dispute, is to protect admissions against interest in settlement negotiations should the matter go to trial.6 If such admissions could be used later against the party who made them, parties could not be frank with each other in settlement negotiations. It
has also been recognised that if the substance of the communication is privileged, all
5 New Zealand Institute of Chartered Accountants v Clarke [2009] 3 NZLR 264 (HC) at [34].
6 Unilever Plc v Procter & Gamble Co [2000] 1 WLR 2436 (CA) at 2448–2449.
aspects of the communication are protected. Statements made in negotiations are not to be dissected to protect only admissions against interests.7
[16] However, the common law has distinguished between the substance of the communication, and aspects of form. Thus, in relation to “without prejudice” communications, the application of those words does not mean that the court cannot refer to peripheral or extraneous aspects of the communication that are independent facts and not part of the documents’ substance. Communications, although made
without prejudice, have been admitted to prove an act of bankruptcy,8 to prove
delay,9 and to identify handwriting.10
[17] The plaintiff only wishes to rely on the fact that there was a “will say” statement produced by Mr Brough at the settlement conference rather than its contents or any aspect of what it contained. I can see no objection to this. The purpose of privilege in the context of settlement conferences is to protect the statements and disclosures made for the purposes of settlement so that they cannot be used against the maker or giver, not the very fact that such documents have come into existence or been exchanged. Indeed, in listing documents for discovery purposes it is the practice to list the document, the date of its existence and its nature, while not disclosing anything of its substance. The purpose of privilege is not in any way damaged by the Court accepting advice that there was a “will say” statement provided by Mr Brough. I will treat this information as admissible.
The interrogatories
[18] Interrogatories are rarely granted in the commercial list.11 Further, it is very rare for interrogatories to be sought in any circumstances with a hearing less than
two weeks away. Given that the fixture is set down, leave is required.12
7 See Unilever Plc v Procter & Gamble Co, above n 6; and New Zealand Institute of Chartered
Accountants v Clarke , above n 5 at [50].
8 Re Daintry, ex parte Holt [1893] 2 QB 116 (QB).
9 Walker v Wilsher [1889] 23 QBD 335 (CA) at 338.
10 Waldridge v Kennison (1794) 1 Esp 142.
11 Sigma Data New Zealand Ltd v Angus Corp Ltd HC Auckland CL5/87, 21 July 1987; Amarillo
Cell Culture Co Inc v Fernz Corp Ltd (No 2) HC Auckland CL52/93, 6 April 1995.
12 High Court Rules, r 7.18.
[19] The question that must be immediately asked is why interrogatories were not sought at an earlier point. The problem that arises is that with such a short time to go before the hearing, any requirement to attend to a further interlocutory, places an unfair burden on a party, particularly an application which requires substantive information about matters at issue in the trial.
[20] The explanation provided on behalf of Consolidated Alloys is that it was expected that Mr Brough would serve a brief of evidence and give evidence. It is submitted that this was a reasonable expectation given the fact that he had provided a “will say” statement at the settlement conference, and that it could be reasonably expected that a party would provide a brief when at stake was that party’s liability for substantial damages.
[21] To evaluate the issue of whether leave should be granted, and the issues of vexatiousness and oppressiveness, it is necessary to look more particularly the interrogatories questions. As can be seen, some are justifiable if it is accepted that the plaintiff reasonably anticipated a brief from Mr Brough, and some are not.
Interrogatories relating to the name or names of those who carried out the allegedly unlawful acts
[22] One of the purposes of these interrogatories is now avowedly to determine whether Mr Brough as the second defendant caused or was responsible for the alleged unlawful acts. For instance, question 5(a) reads:
State the name of the individual or individuals who made the decision to create each of the three versions of the first defendants’ products branded EZ-Edge which are at issue in this proceeding.
[23] This question plainly relates to a fact directly at issue. Although it is not worded in this exact way, I accept the thrust of the question; whether Mr Brough made the decision, or if it was not Mr Brough who did. I do not regard the question as relating to an ancillary fact. It is directly at issue in the proceedings whether the second defendant did the various unlawful acts. Nor do I regard it as a fishing question. It is pleaded that Mr Brough is the sole director of the first defendant
Edging Systems and manages its operations and he admits the former proposition while denying the latter.
[24] While a question relating to his involvement could be asked more directly, the plaintiff is entitled to know if it was Mr Brough in his capacity as sole director of the company was responsible for the alleged unlawful acts.
[25] Therefore, it is my view that the questions are relevant. Importantly, I also consider that it is reasonable to ask the question such a short time before the hearing. A party, if it can show it had a reasonable expectation of information being provided by briefs, should not be penalised for failing to seek interrogatories. Indeed, on occasions parties are criticised for seeking interrogatories when the information is likely to be provided by briefs, thus duplicating costs. Here, with the provision of the “will say” statement, the expectation that Mr Brough would file a brief was not unreasonable.
[26] I do not consider that the task of responding to these interrogatories will be onerous. Mr Brough should be able to name who was responsible for the various significant actions that are the subject of these proceedings. It can be foreseen that he could provide these answers quickly and without particular research. It should not be a distraction from preparing for trial. Preparation for trial is clearly not a priority for Mr Brough right now as he is in Greece. I find it hard to accept that he cannot be contacted for what will now be more than two weeks. He is back next week in any event.
[27] Thus, although the application for interrogatories is filed very late I consider the initial questions 5(a)–(h) to be relevant and I do not consider the answering of them to be oppressive. I think that in all the circumstances it is reasonable to grant leave.
[28] There are, however, some changes to the wording of the interrogatories required. The word “procured” is a word that has various legal meanings and should be replaced by the word “caused” in paragraphs 5(e), (f) and (g). There is an error in
5(c) and the last clause should read “and [identify] the author of the drawings”.
[29] It was suggested that interrogatories 5(b) and (c) are tautologous, but I do not agree. One seeks the name of the individual or individuals responsible for the design, and the other seeks the name of the individual or individuals who prepared the designs. These are two different concepts.
[30] I will also direct interrogatory 5(o) as this relates to the creation of drawings involved in the development of the EZ-Edge product. It could have been reasonably anticipated that Mr Brough’s brief would have covered this, and the answer will be of considerable relevance.
[31] Therefore, I will direct the second defendant to answer interrogatories
5(a)-(h) and (o) with the wording changes to the word “procure” or “procuring”, and the addition of the word “identify” as outlined.
Interrogatories relating to complaints
[32] The next section of the interrogatories (items 5(i)–(n)), relate to the awareness on the defendants’ part of complaints about and defects of the EZ-Edge product. These interrogatories would be time consuming to answer and would involve the defendants endeavouring to identify all complaints that had been made about their product. There is no reason for the asking of these questions so late in the piece. To prepare the answers would be a most onerous task a short time out before the hearing. The plaintiff could not fairly anticipate that it could elicit this sort of detailed information in cross-examination. If it had wanted this information it should have sought the necessary discovery or interrogatories before the case was set down for hearing.
[33] The interrogatories also relate to matters of peripheral evidence and may be objectionable on that basis, although this has not been argued by the defendants.
[34] If the application related to these questions only I would not have given leave. As it is I decline to issue these particular interrogatories.
Miscellaneous
[35] I note that interrogatory 5(p) is no longer sought. Interrogatory 5(q) relates to the name of the “individual or individuals” who wrote information in a discovered document. This question does not appear to me to relate to the central factual issues of the case, and involves considerable detail. I consider it would be oppressive to require the defendants to answer it at this point of time.
[36] Similarly interrogatory 5(r) seems to ask for the name of all individuals employed by the first defendant or involved in its operation during the relevant time. This question is wide ranging and appears to me to seek the names of witnesses. It has a “fishing” character. I consider it oppressive.
[37] The final interrogatory 5(s) asks for the physical address from which the first defendant operates. It is not defined and the question is of peripheral relevance and relates to a tangential fact. I am not prepared to direct that it be answered.
Conclusion
[38] The plaintiff is granted leave to bring this application to answer interrogatories.
[39] I direct that the second defendant answer questions 5(a)–(h) and (o) with the changes to questions 5(c), (e), (f) and (g) as outlined at [31]. The application to direct the first and second defendants answer questions 5(i)–(n) and 5(p)–(s) is declined.
Costs
[40] Both parties have had a measure of success in relation to this application and costs will lie where they fall.
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Asher J
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